We show that for the active-sterile flavor mixing parameters suggested by the reactor neutrino anomaly, substantial conversion between neutrinos (antineutrinos) of the electron and sterile flavors occurs in regions with electron fraction close to 1/3 near the core of an 8.8 solar mass supernova. Compared to the case without such conversion, the neutron-richness of the ejected material is enhanced to allow production of elements from Sr, Y, and Zr up to Cd in broad agreement with observations of the metal-poor star HD 122563. Active-sterile flavor conversion also strongly suppresses neutrino heating at times when it is important for the revival of the supernova shock. Our results suggest that simulations of supernova explosion and nucleosynthesis may be used to constrain active-sterile mixing parameters in combination with neutrino experiments and cosmological considerations.